Gas Market
Reports that U.S. and Iranian negotiators may resume talks this week aimed at ending the war put downward pressure on UK wholesale gas prices on Tuesday. Additional downside came from ship-tracking data showing that four Iran-linked vessels had crossed the Strait of Hormuz since Washington’s naval blockade began on Monday. However, uncertainty over the scope of the blockade’s enforcement, combined with the fragility of the ceasefire, kept prices elevated. By the close, the front month May 26 contract had fallen by 8.04p to settle at 108.75p per therm, its lowest close since the war began. Losses across the near months exerted downward pressure on the prompt market, while the downside was compounded by forecasts of warmer temperatures and elevated wind power levels. The Day ahead contract shed 10.55p day-on-day to close out the session at 106.95p per therm.
Power Market
Easing geopolitical risk premium across gas and oil markets fed into losses across the GB Baseload power curve on Tuesday. The May 26 front month contract fell by £4.25/MWh by the close to settle at £87.00/MWh. Further out, losses were more subdued, with the Winter 26 contract shedding £2.88/MWh day-on-day. The prompt market was pressured down by strong wind production levels, with the Day ahead contract posting a 28.9% loss to finish out the session at £75.89/MWh.
European carbon markets rose to their highest levels in 2 months on Tuesday, bucking the downward trend set by the wider energy complex. Dec 26 European Allowances gained €2.13 by the close to settle at €74.72 a tonne.
Oil Market
In response to hopes of the U.S. and Iran striking a peace deal to resume transit of the Strait of Hormuz alongside peace talks between Israel and Lebanon, crude oil markets showed an optimistic downturn on Tuesday. The U.S. blockade remained in place at Iranian ports, however reports emerged yesterday that some Iran-linked vessels had been allowed to pass the blockade as long as their destination was not Iran. Further downside came from news that Russian oil exports from the Black Sea port of Tuapse increased output by 60%, which is expected to bolster global oil supply levels, with the International Energy Agency (IEA) reporting a decline in global oil demand of 3.4% in March. The front month Brent contract declined by $4.57 day-on-day to settle at $94.79 per barrel. Meanwhile, the West Texas (WTI) front month contract showed a larger drop, settling at $91.20 per barrel, down $7.80 from the previous days close.
Markets this morning
UK wholesale gas prices have moved lower this morning, building on yesterday’s losses. Comments made by Donald Trump that suggested U.S.-Iran talks could restart between today and tomorrow and that the war is “very close to over” has eased the geopolitical outlook. The front month contract last went through at 106.00p per therm, down 2.75p on yesterday’s close. In contrast, crude oil prices are trading moderately higher, taking a more cautious approach to news of potential further peace talks while exports via the Strait of Hormuz remain constrained. The front month Brent contract last traded at $95.88 a barrel, up $1.09 on last nights close.
